Orkut. Channel V. Videocon Telecom. What do they all have in common?
One heck of a successful run before they all went out of business.
Like Orkut, Channel V, and Videocon Telecom, numerous businesses—big and small—taste success but then pack up their bags and leave town never to return again.
What pushes these businesses off the cliff? Wars, recession, poor marketability, inability to overcome competition, pandemics, draughts, poor leadership, lack of resources, to name a few. These ever-changing business, market, geographic, and political conditions give rise to a VUCA world.
Volatility (the dynamic rate of change businesses face today), Uncertainty (the lack of predictability and timely information), Complexity (the interdependent systems that do not exhibit clear cause and effect), and Ambiguity (the difficulty in accurately assessing reality in a complex and volatile landscape) are conditions that are inherent to business and market cycles.
Businesses have little control over these unpredictable situations. Yet, some mint money while some barely manage to stay afloat. Their secret—preparing for and adapting to a VUCA world.
How to lead effectively in a volatile world?
The world will change without our permission and we will have to adapt and adjust to survive. Volatility in the business world could translate into fluctuating interest rates, value of a currency, or market confidence in your business. On a micro level, it could also mean change in organisational leaders or mergers and buyouts.
Volatility can drain leaders, both physically and mentally, even as they try to keep up. But, if you are able to understand market changes faster and in greater detail, leading through volatility becomes easier.
Hence, break down and categorise data into information. More often than not, as a leader, you will have to scroll through pages of data points that you won’t be able to make any sense of. For example, a day by day fluctuation in your share market price won’t tell you much. But if your team puts this data into a graph you’ll be able to gauge the exact direction your share prices are headed in. A list of the factors affecting your share prices will help you further control them to some extent. The problem with volatile situations is being presented with enormous amounts of data that take too long to understand, affecting your ability to respond in time to minimise the negative impacts on your business.
In times of volatility, the sheer amount of fluctuation in the market can leave us bewildered and incapable of communicating effectively. Hence, set up strong communication processes. Work with your team to develop a communication system that makes it easier for everyone to express their ideas faster and with greater clarity.
Spell out the exact end goal and make sure your team understands what they are fighting for. A clear understanding of expected outcomes should help your team make the right decisions much faster without waiting on you. Therefore, your purpose, key tasks, and the end goal should always be available to every team member.
How to lead effectively in an uncertain world?
Leading a business towards success is difficult when you’re not sure if the information you have is correct, definite, and reliable. Add volatility to the equation and it seems like you’re digging your own grave.
Uncertainty, however, also has its benefits. As Frank Knight writes in Risk, Uncertainty and Profit, “real opportunities for profit only exist in the face of genuine uncertainty.” Hence, if you’re prepared and innovative, you won’t flee from uncertainty, you will seek it.
In business, uncertainty translates to changes in government policy, election results, weather and environmental concerns, trying out novel technology, unexpected supplier problems, etc. Uncertainty causes stress and lack of productivity in an organisation as employees are constantly wondering about what could happen. Uncertainty teaches us to learn from our past and prepare for similar events in the future, yet we can never be fully prepared as even the slightest change can alter the outcome of a situation.
That’s when thinking from a fresh perspective helps—even if it means thinking of the worst outcomes. If your team is as motivated as you are, they will all want to solve the problem, and when an uncertain event presents itself, everyone will chime in to find a solution. The people who bring a fresh perspective will also be the ones who consider how the business might fail more often. In thinking about the worst that could happen, you will find yourself more prepared for an uncertain reality.
Uncertainty will always creep in. Hence, it helps to be flexible. Entering the battlefield with a hard-set plan could leave you in a situation where neither you nor your team knows what to do next. Help your team develop a strong instinct that will support them in taking the right decisions in such uncertain situations.
Borrow from the experiences of the past as you prepare for the future. Past events—the plans you made and the decisions you took—can serve as a library of useful information, insights on how to move forward, and examples of what works and doesn’t work for your company. Thorough reviews should be conducted to assess the outcomes of the events with the purpose of accelerating your business.
How to lead effectively in a complex world?
Complexity of a business is directly proportional to the number of interconnected stakeholders, processes, technology, and structures. Globalisation, regulatory processes, high-speed communication, technology, etc., are to be blamed. Small local businesses with few employees and minimal product lines are far less complex than conglomerates with over a thousand employees, hundreds of SKUS, and multiple technologies and softwares.
Yet, our ancestors, the early sapiens who invented business, too faced complex situations. The secret to overcoming complexity in business is having the right leaders looking after these complex processes.
The right leaders know that effective communication and collaboration is key to smooth business functioning. Complex situations become easy when the team is driven by a single intent and is willing to work together to achieve it. With a single goal in mind, people tend to simplify processes for others, offer essential information easily, and are ready to help whenever asked. As a leader, you will be tested for your ability to build a team that contributes and learns together.
Once you have a strong team that collaborates well, it’s time to prepare your people for a variety of situations. One reason why businesses fail is that their entire organisation is driven by one person who dreams of the vision and holds the place together. Whereas successful businesses have everyone dreaming the same vision. In your time as a leader, you will find many young leaders who are waiting for an opportunity to be trained, mentored, and challenged. These are the people you need to start training and developing immediately. Notice their skills and their weaknesses and help them become valuable assets to the organisation.
Dealing with complexity doesn’t mean nipping a difficult situation in the bud. Sometimes, putting an end to a complex situation might require resources, time, and money that can be effectively applied elsewhere. It is better to solve complexities to a point that they don’t bother you, rather than solving one and leaving several others haunting you.
How to lead effectively in an ambiguous world?
Ambiguous situations lead to internal conflicts and missed opportunities. In a typical ambiguous environment, leaders are sometimes unaware of the problem, solution, business environment, or all the three. In such times, it is natural for you to panic and freeze.
For example, when the RBI announces it is releasing funds into the market, but there is no clear explanation about where the funds will be used; this might affect your business if you are planning to borrow funds from the market and are unaware about the interest rate fluctuations post the announcement.
When several businesses announce a hiring freeze or layoff multiple employees at a time with no clear explanation, you begin to wonder if the markets are going to crash. What do you do with your production cycles, do you layoff employees too, or should you expand to different territories?
An ambiguous situation leads to ambiguity in internal processes as well—you don’t have a clear idea of what you should do, so you ask your team to do random tasks, they get confused, and the workplace becomes a negative and chaotic place.
Learn to listen carefully to your CEO and other top management. And if you are unsure about something, ask. What is the goal? What is your team supposed to do? And if you have the answers, it is your obligation to explain the same to your team. Having as much internal clarity during ambiguous situations helps propel the organisation forward.
Work with your team to develop an out-of-the-box mindset if you want to come up with indigenous solutions. When facing unsure situations, solutions can come from even the most unexpected people. Hence, it is wise to allow everyone a chance to offer some expertise. Sometimes, a solution might not be the best, but it can still be effective. And there will be several effective solutions. Having options in a situation you don’t know enough about is always a good thing.
And when you have small successes, be sure to celebrate them. When your team and stakeholders are unaware and doubtful, knowing that they’re heading in the right direction lifts their spirits and they develop greater trust in you
Leadership happens in moments and it’s in these moments that great things happen. When we have a choice but are feeling reactive, we fail to mobilise and lose opportunities forever. Values are at the core of doing business in VUCA times, and shifting our focus from the external to internal values helps keep businesses successful or at least afloat. In a VUCA world, many businesses tend to go faster and faster to keep up and wear themselves out in the process. Instead, VUCA world or not, if you want to stay in business, building a strong and capable team should be your focus.